A report released Tuesday accuses the Philadelphia Commerce Department of failing to properly monitor a $135 million cultural program.

Money was granted to at least one business that has since shut down, while another business was given $50,000 despite owing “thousands in state and federal taxes,” City Controller Alan Butkovitz said in a review of the taxpayer-funded Cultural and Commercial Corridors Program, funded with a $135.5 million bond issued in 2006 by the Philadelphia Authority for Industrial Development.

Butkovitz’s report was especially critical of the The Merchants Fund. The one-employee nonprofit received $1 million. The report said it dispensed an average of $42,000 to 18 businesses — including a coffee shop that has since shut down and a restaurant that was in arrears on taxes — “without any criteria to evaluate the effectiveness of each project’s outcome.”

“We question the soundness of Commerce’s decision to use a small organization having only one employee to administer $1 million in grant funds,” said Butkovitz. “It’s even more troubling that Commerce did not maintain adequate records of site visits while the renovations were ongoing.”

The Commerce Department has not responded to a call for comment.

Peter Van Allen covers hospitality, marketing and retail.

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